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A federal banking regulator on Wednesday released a final version of new rules on dollar-pegged stablecoins.
The rules give companies issuing stablecoins more flexibility while leaving a contentious question of stablecoin yield unresolved.
The Office of the Comptroller of the Currency (OCC) finalized rules for implementing the landmark stablecoin legislation President Trump signed into law last year, known as the GENIUS Act. Those rules ease several proposed restrictions on how stablecoin issuers must manage their reserves, including a previous maturity limit that would have prevented issuers from holding longer-term Treasurys.
The OCC, meanwhile, left one of the biggest industry disputes over stablecoins unanswered.
Crypto and banking industry lobbyists squared off earlier this year over whether third-party crypto operators could pay customers yield on their idle stablecoin balances.
Read more: How stablecoins work
Crypto firms have argued that they should have room to compete with banks, while banks have raised concerns that allowing the activity risks deposits being pulled out of the banking system without subjecting the new competition to the same regulatory requirements banks face.
While the GENIUS Act prevents stablecoin issuers from paying interest directly, the OCC eliminated a proposed provision that would have barred crypto exchanges and other third-party platforms from offering customers yield on their idle stablecoin balances.
Instead, the agency said it will evaluate those kinds of arrangements on an individual basis.
TD Cowen policy analyst Jaret Seiberg described the decision as a "negative for banks as it does not fully shut down the ability for platforms to pay yield on stablecoins."
"We see this as creating uncertainty," Seiberg wrote to clients on Wednesday. "It also suggests the Supreme Court ultimately will need to decide what yield payments are legal."
Circle Internet Group (CRCL), the country's largest stablecoin issuer, and major crypto exchange Coinbase Global (COIN) applauded the new rules. (Disclosure: Yahoo Finance has a partnership with Coinbase.)
"We welcome the OCC's final rules implementing the GENIUS Act — an important milestone in translating America's leadership on stablecoin legislation into clear, durable regulatory standards," Dante Disparte, Circle's chief strategy officer and head of global policy, said in a statement.
"There's a lot to like," Coinbase chief policy officer Faryar Shirzad said in a post on X, referring to the new rules.
The banking industry, of course, saw it differently.
"The result is a final rule that will preserve the status quo for crypto platforms despite Congress's clear intent to protect local lending," American Bankers Association CEO Rob Nichols said in a statement.
"While ICBA continues to review today's GENIUS Act final rule from the OCC, we remain focused on ensuring the agency's policies protect against the risks that payment stablecoins pose to community bank lending, local communities, and financial stability without appropriate regulatory safeguards," the Independent Community Bankers of America said in a statement.
Circle and Coinbase stock each rose more than 4%. Other crypto stocks and companies that offer customers stablecoins, including Robinhood Markets (HOOD), Gemini Space Station (GEMI), Bullish (BLSH), and PayPal (PYPL), also rose.
The new rules give issuers a lot more freedom. Instead of being stuck with a strict once-a-month schedule, they can pull out their extra cash whenever they want, as long as every stablecoin is still fully backed. Plus, the OCC eased limits on how much money issuers can keep with a single partner while keeping the main safety rules in place to prevent things from getting too risky.
When customers want to withdraw stablecoins, the OCC dropped a plan that would have let issuers take longer to return customers' money during heavy withdrawal periods. Instead, if investors request to cash out more than 10% of the outstanding value of any stablecoin issued, the issuer must alert the OCC within 24 hours.
Issuers still have to maintain reserves backing their outstanding stablecoins at least one-to-one, meet liquidity requirements, and comply with counterparty exposure limits and stress-testing obligations. The final rule also allows bank deposits to serve as reserve assets backing payment stablecoins.
The regulator also aims to create opportunities for community banks to participate in payment stablecoins with requirements tailored to an issuer's business model, risk profile, and size.
Regulators noted that the impact of stablecoin adoption on community bank deposits remains uncertain, and estimates vary widely. The OCC plans to closely monitor potential deposit outflows as the industry develops.
"We are providing a clear, practical framework for payment stablecoin innovation, with strong standards for reserve backing, redemption, and risk management," Comptroller of the Currency Jonathan Gould said.
Treasury Secretary Scott Bessent called it a "watershed moment."
The OCC is the first regulator to finalize rules. The Treasury Department is working on separate regulations.
Regulatory officials expect a flood of applications from new stablecoin issuers, both inside and outside the banking sector, when the new rules take effect on Jan. 18.
